Progressives have been pressuring Federal Housing Finance Agency director Edward DeMarco to allow government backed mortgage giants Fannie Mae and Freddie Mac to reduce mortgage principal for troubled homeowners. DeMarco, whose agency regulates Fannie and Freddie, has been resisting that push, claiming that providing aid to homeowners would be detrimental to Fannie and Freddie’s (and thus the taxpayer’s) bottom line.

DeMarco has been claiming that mortgage principal reductions would cost taxpayers $100 billion, but analysts last week threw cold water on that number, saying it comes from a flawed study. And today, ProPublica reports that an internal analysis from Fannie and Freddie found that aiding homeowners would save taxpayers money in the long run:

New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.

Their conclusion: Such loan forgiveness wouldn’t just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses. […]

The companies now find that reducing principal on troubled mortgages has a “positive net present value” — in other words, that doing it would bring in more money for the companies over the life of the loans than not doing it.

The two companies’ analyses showed that upwards of a quarter million borrowers who owe more on their mortgages than their homes are worth could benefit from principal reductions. The companies would take a loss upfront, but over the long run these mortgage modifications would save the companies money because they would lead to lower default rates.

Many economists have said that Fannie and Freddie writing down mortgages would aid the economy and Department of Housing and Urban Development Secretary Shaun Donovan has tried to push the FHFA to allow the mortgage giants to take that step. Hopefully, this new analysis will lend some momentum to those saying that the most prudent thing the government can do to help Fannie and Freddie — and the wider economy — is keep people in their homes, rather than adding to the glut of vacant houses that haul down home prices for everyone in the neighborhood.